Upon reboot of a freshly installed 1.2 system there is no login prompt on the console. The last console output shows init.d/local.start as ok. I can login via ssh from another machine on the network, just not at the console itself.

Not sure how this would be possible, but it sounds like your inittab files might be fandangled. Can you post an extract of /etc/inittab, particularly if you have lines containing the word 'getty' / 'agetty' / 'mgetty' etc in them.

Since your normal stuff is starting up fine, I don't think there's anything wrong with your init process per se, but you might need to tweak inittab to make sure consoles are being spawned.

# What to do at the "Three Finger Salute".
ca:12345:ctrlaltdel:/sbin/shutdown -r now

# Used by /etc/init.d/xdm to control DM startup.
# Read the comments in /etc/init.d/xdm for more
# info. Do NOT remove, as this will start nothing
# extra at boot if /etc/init.d/xdm is not added
# to the "default" runlevel.
x:a:once:/etc/X11/startDM.sh

# End of /etc/inittab

the agetty are there. Do you have any idea on how to get a clue on what the boot is stuck.

Upon reboot of a freshly installed 1.2 system there is no login prompt on the console. The last console output shows init.d/local.start as ok. I can login via ssh from another machine on the network, just not at the console itself.

After an investigation the problem seem simple.
make sure SMP is not selected in your kernel.
The boot process will hang after local if the network card is static
or after requetsing dhcp if the network uses it.

This problem often raises its ugly head in Paravirt / Xen setups.
You may need to change your inittab tty1 to hvc0 if your login prompt doesn't display
and it looks like you are stuck at local.start [OK]

This worked! Thanks!_________________Programming today is a race between software engineers striving to build bigger and better idiot-proof programs, and the Universe trying to produce bigger and better idiots. So far, the Universe is winning." Rich Cook

Well, everything was fine since my last post until recent upgrade of udev to 197-r3 and then r4. After that I lost all Xen devices and had to recreate /dev/xvda* files manually for my system to boot properly again. Fortunately I managed to have my system up and running, but lost the console. This happened with my old kernel (3.2.12), but also with a new 3.5.7 which I installed after udev upgrade.

id make sure to move your smp back to Y as it controls multi processor... id not mark that as solved, just as a temp work around. maybe GDM/XDM/KDM would be good for u, or wicd/networkmanager and turning off the dhclient/dhcpcd & network interface boot script....